Got a couple extra glow plug washers? Put them on so the plug can't go in as far and then try it. Don't try to run it this way, just turn it over. Odds are the noise is the conrod, not the plug hitting the piston. You're may be hearing the noise because the piston is going up against compression when the plug is in, but is more free to move when there's no compression.

One more comment, if the engine is new, why are you trying to peak it? Break it in before you start torturing it with lean runs.